Not so long ago, the distinction between a financial services company and a technology company is clear and well-defined. Nowadays, the lines between the two are so blurred to the point that many of each other’s services overlap – thankfully, to the benefit of the customers. It is so common for many technology companies nowadays to apply for financial services license, while traditional financial services organisations now call themselves tech innovator.
Fintech, or financial technology, is at the core of this transformation. As key players from both industries try to outcompete each other in terms of maximising operational efficiency, lowering costs and improving customer experience, there will be inevitable winners are losers. Only time will tell which companies will emerge on top but for now, these are the 10 most promising fintech startups to watch in 2020.
It is so common for many technology companies nowadays to apply for financial services license, while traditional financial services organisations now call themselves tech innovator.
1. Plaid
Plaid serves as a mediator between finance/payment apps and customer bank accounts. Plaid allows easy fund tracking and transfers. And it has a major appeal, where it doubled its customer count in 2019. The company has since expanded to Europe, where it now operates in Ireland, France, Spain, and the UK! Its excellent performance made it an acquisition target by Visa. In addition, it has appeared 5 times in the Forbes’ Fintech 50 list!
Current market value is $5.3 billion.
2. Stripe
Stripe provides an economic infrastructure that ensures safe and secure payment and online business management for businesses of all sizes. Right from its inception in 2010, the aim of its founders, Patrick and John Collison, was to provide payment solutions for SMEs and help them grow their business, using a secure billing system that could detect and protect them from fraudulent activities on the internet. With Stripe, merchants can connect to buyers, create complex billing systems, use SQL-powered analytics, create and distribute cards, and also perform other financial management functions necessary for by their business. Stripe provides these services so seamlessly, that tech giants Microsoft and Amazon, including 1000,000 other companies rely on their services.
Current market value is $35.5 billion.
3. Monzo
Ever since its UK banking license restriction was lifted in 2017, Monzo has gained more popularity and acceptance. The company’s statistics claim that one in every twenty adults in the United Kingdom uses Monzo online banking platform. Monzo became a billion dollars company in 2018 after its fundraising campaign got £85mn from US venture capital investors. As of October 2019, the digital-only bank had over 140,000 customers. With an estimated 55,000 new signups every week, the number is bound to keep increasing. Monzo is committed to helping people make smarter decisions with their money. Hence, it already has a feature that prevents users from spending their funds on gambling, and the company aims to extend the same blocking functionality to the purchase of junk food.
Current market value is $2.5 billion.
4. Coinbase
Coinbase is one of the largest crypto-currency exchange services in the world. Headquartered in San Francisco, California, Coinbase is a secure platform that makes it easy to buy, sell, and store cryptocurrency like Bitcoin, Bitcoin Cash, Ethereum, Ethereum Classic, Litecoin, Tezos, and many others. It brands itself as a regulation-compliant company offering security and convenience. In addition, the company offers auxiliary services such as personal electronic wallets, and new currencies to those seeking added privacy.
Current market value is $8.1 billion.
5. TransferWise
TransferWise was established with the main aim of cutting the outrageous bank charges people pay to transfer money abroad. It was established in 2010 by Kristo Käärmann and Taavet Hinrikus, who were fed up with the bank charges they had to pay to transfer funds between the UK and Estonia. With over six million customers using their service, TransferWise distributes up to 4 billion dollars every month across 750 currencies. It charges a decent transfer rate, which is lower than the typical bank rate.
Current market value is $3 billion.
6. NuBank
Nubank was created to provide efficient, fair, and transparent banking services for Brazilians, who are tired of the traditional banking system, which charges them exorbitant fees and high-interest rates despite being poor at service delivery. Nubank offers free digital accounts with no maintenance charges, credit card services, personal loans, and world-class customer service. It was established by David Valez, Cristiana Junqurai, and Edward Wible in 2013. Its operations kickstarted in 2014, and as of 2018. Nubank became the third Brazilian bank to hit the one billion dollar mark.
Current market value is $10 billion.
7. Ripple
Ripple enables banks, payment providers, digital asset exchanges and companies to send money globally using advanced blockchain technology. It provides real-time gross settlement system, currency exchange and remittance. It facilitates international payments for 300 institutional clients including Santander and Standard Chartered. In 2019, it sold over $500 million worth of XRP, allowing the company to expand and invest in MoneyGram too!
Current market value is $10 billion.
8. Robinhood
Robinhood is a commission-free investment portal that provides users with investment opportunities in the US stock market, options, ETFs, and ADRs. It was established in 2013 by Vladimir Tenev and Baiju Bhatt. Robinhood has so far registered about 6 million users who enjoy a range of other banking services, including savings and checking accounts, debits, and also the purchase of cryptocurrencies. All these are done through the Robinhood App or website without requiring any foreign exchange fees or account minimums.
Current market value is $7.6 billion.
9. Lemonade
Lemonade is a leading casualty and property insurance company that was built on a unique model of charging a flat rate and paying claims and premium within minutes, unlike what’s obtainable in the traditional insurance industry. Lemonade uses a highly sensitive artificial intelligence bot, Maya, and chat messengers, via which clients can receive quotes, advice, and insure their assets within minutes. Lemonade believes in giving back to the society; hence, a considerable part of the leftover money in the users’ insurance pool goes to charity.
Current market value is $2 billion.
10. Klarna
Klarna is a Sweden-based online banking platform that provides payment solutions to different online stores. It eliminates payment hassles for online shoppers by allowing them to pay for their purchases after 30 days, or in instalments for three months. Klarna grew to become the biggest fintech company in Europe in August 2019, after it received a 460-million-dollar funding, which raised its financial strength to 5.5 billion dollars. It partners with reputable vendors like ASOS and over 1,500 other retailers. It has 80 million active users in 250 countries, and with 50,000 new customers every week, Klarna is on the path for even bigger growth.
Current market value is $5.5 billion.
